The word "silicon" originally referred to the large number of siliconchip innovators and manufacturers in the region, but the area is now the home to many of the world's largest high-tech corporations, including the headquarters of 39 businesses in the Fortune 1000, and thousands of startup companies. Silicon Valley also accounts for one-third of all of the venture capital investment in the United States, which has helped it to become a leading hub and startup ecosystem for high-tech innovation and scientific development. It was in the Valley that the silicon-based integrated circuit, the microprocessor, and the microcomputer, among other key technologies, were developed. As of 2013, the region employed about a quarter of a million information technology workers.[2]

As more high-tech companies were established across San Jose and the Santa Clara Valley, and then north towards the Bay Area's two other major cities, San Francisco and Oakland, the "Silicon Valley" has come to have two definitions: a geographic one, referring to Santa Clara County, and a metonymical one, referring to all high-tech businesses in the Bay Area. The term is now generally used as a synecdoche for the American high-technology economic sector. The name also became a global synonym for leading high-tech research and enterprises, and thus inspired similar named locations, as well as research parks and technology centers with a comparable structure all around the world.

Origin of the term

Perhaps the strongest thread that runs through the Valley's past and present is the drive to "play" with novel technology, which, when bolstered by an advanced engineering degree and channeled by astute management, has done much to create the industrial powerhouse we see in the Valley today.

The first published use of Silicon Valley is credited to Don Hoefler, a friend of local entrepreneur Ralph Vaerst's who suggested the phrase to him. Hoefler used the phrase as the title of a series of articles in the weekly trade newspaperElectronic News.[4] The series, titled "Silicon Valley in the USA", began in the paper's January 11, 1971, issue. The term gained widespread use in the early 1980s, at the time of the introduction of the IBM PC and numerous related hardware and software products to the consumer market. The silicon part of the name refers to the high concentration of companies involved in the making of semiconductors (silicon is used to create most semiconductors commercially) and computer industries that were concentrated in the area. These firms slowly replaced the orchards and the fruits which gave the area its initial nickname—the "Valley of Heart's Delight".

History (before 1970s)

Silicon Valley was born through several contributing factors intersecting, including a skilled STEM research base housed in area universities, plentiful venture capital, and steady U.S. Department of Defense spending. Stanford University leadership was especially important in the valley's early development. Together these elements formed the basis of its growth and success.[5]

Roots in telegraph, radio, commercial and military technology

On August 23, 1899, the first ship-to-shore wireless telegraph message to be received in the US was from the San Francisco lightship outside the Golden Gate, signaling the return of the American fleet from the Philippines after their victory in the Spanish–American War.[6] The ship had been outfitted with a wireless telegraph transmitter by a local newspaper, so that they could prepare a celebration on the return of the American sailors.[7] Local historian Clyde Arbuckle states in Clyde Arbuckle's History of San Jose[8] that "California first heard the click of a telegraph key on September 11, 1853. It marked completion of an enterprise begun by a couple of San Francisco Merchants' Exchange members named George Sweeney and Theodore E. Baugh…" He says, "In 1849, the gentleman established a wigwag telegraph station a top a high hill overlooking Portsmouth Squares for signaling arriving ships… The operator at the first station caught these signals by telescope and relayed them to the Merchant's Exchange for the waiting business community." Arbuckle points to the historic significance the Merchants Exchange Building (San Francisco) and Telegraph Hill, San Francisco when he goes on to say "The first station gave the name Telegraph to the hill on which it was located. It was known as the Inner Station; the second, as the Outer Station. Both used their primitive mode of communication until Messrs. Sweeney and Baugh connected the Outer Station directly with the Merchants's Exchange by electric telegraph Wire."

According to Arbuckle (p.380–381) Sweeney and Baugh's line was strictly an intra-city, San Francisco-based service; that is until California State Telegraph Company enfranchised on May 3, 1852; whereas, O.E. Allen and C. Burnham led the way to "build a line from San Francisco to Marysville via San Jose, Stockton, and Sacramento." Delays to construction occurred until September 1853; but, "…San Jose became the first station on the line when the wire arrived here on October 15. The line was completed when [James] Gamble's northbound crew met a similar crew working southward from Marysville on October 24."

The Bay Area had long been a major site of United States Navy research and technology. In 1909, Charles Herrold started the first radio station in the United States with regularly scheduled programming in San Jose. Later that year, Stanford University graduate Cyril Elwell purchased the U.S. patents for Poulsen arc radio transmission technology and founded the Federal Telegraph Corporation (FTC) in Palo Alto. Over the next decade, the FTC created the world's first global radio communication system, and signed a contract with the Navy in 1912.[3]

In 1933, Air Base Sunnyvale, California, was commissioned by the United States Government for use as a Naval Air Station (NAS) to house the airship USS Macon in Hangar One. The station was renamed NAS Moffett Field, and between 1933 and 1947, U.S. Navy blimps were based there.[9] A number of technology firms had set up shop in the area around Moffett Field to serve the Navy. When the Navy gave up its airship ambitions and moved most of its west coast operations to San Diego, the National Advisory Committee for Aeronautics (NACA, forerunner of NASA) took over portions of Moffett Field for aeronautics research. Many of the original companies stayed, while new ones moved in. The immediate area was soon filled with aerospace firms, such as Lockheed.

Ham radio

The Bay Area was an early center of ham radio with about 10% of the operators in the United States. William Eitel, Jack McCullough, and Charles Litton, who together pioneered vacuum tube manufacturing in the Bay Area, were hobbyists with training in technology gained locally who participated in development of shortwave radio by the ham radio hobby. High frequency, and especially, Very high frequency, VHF, transmission in the 10 meter band, required higher quality power tubes than were manufactured by the consortium of RCA, Western Electric, General Electric, Westinghouse which controlled vacuum tube manufacture. Litton, founder of Litton Industries, pioneered manufacturing techniques which resulted in award of wartime contracts to manufacture transmitting tubes for radar to Eitel-McCullough, a San Bruno firm, which manufactured power-grid tubes for radio amateurs and aircraft radio equipment.[10]

Welfare capitalism

A union organizing drive in 1939–40 at Eitel-McCullough by the strong Bay Area labor movement was fought off by adoption of a strategy of welfare capitalism which included pensions and other generous benefits, profit sharing, and such extras as a medical clinic and a cafeteria. An atmosphere of cooperation and collaboration was established.[11] Successes have been few and far between[12] for union organizing drives by UE and others in subsequent years.[13]

U.S. response to Sputnik

On October 4, 1957 the Soviet Union launched the first space satellite, Sputnik, which sparked fear that the Soviet Union was pulling ahead technologically. After President Eisenhower signed the National Aeronautics and Space Act (NASA), he turned to Fairchild Semiconductor, then the only company in the world that was able to make transistors. The president funded Fairchild's project, which was highly successful.[14]

A very powerful sense of regional solidarity accompanied the rise of Silicon Valley. From the 1890s, Stanford University's leaders saw its mission as service to the West and shaped the school accordingly. At the same time, the perceived exploitation of the West at the hands of eastern interests fueled booster-like attempts to build self-sufficient local industry. Thus, regionalism helped align Stanford's interests with those of the area's high-tech firms for the first fifty years of Silicon Valley's development.[16]

During the 1940s and 1950s, Frederick Terman, as Stanford's dean of engineering and provost, encouraged faculty and graduates to start their own companies. He is credited with nurturing Hewlett-Packard, Varian Associates, and other high-tech firms, until what would become Silicon Valley grew up around the Stanford campus. Terman is often called "the father of Silicon Valley".[17]

Stanford Industrial Park

After World War II, universities were experiencing enormous demand due to returning students. To address the financial demands of Stanford's growth requirements, and to provide local employment opportunities for graduating students, Frederick Terman proposed the leasing of Stanford's lands for use as an office park, named the Stanford Industrial Park (later Stanford Research Park) in the year 1951. Leases were limited to high technology companies. Its first tenant was Varian Associates, founded by Stanford alumni in the 1930s to build military radar components. However, Terman also found venture capital for civilian technology start-ups. One of the major success stories was Hewlett-Packard. Founded in Packard's garage by Stanford graduates William Hewlett and David Packard, Hewlett-Packard moved its offices into the Stanford Research Park shortly after 1953. In 1954, Stanford created the Honors Cooperative Program to allow full-time employees of the companies to pursue graduate degrees from the University on a part-time basis. The initial companies signed five-year agreements in which they would pay double the tuition for each student in order to cover the costs. Hewlett-Packard has become the largest personal computer manufacturer in the world, and transformed the home printing market when it released the first thermal drop-on-demand ink jet printer in 1984.[21] Other early tenants included Eastman Kodak, General Electric, and Lockheed.[22]

Computer networking

On April 23, 1963, J.C.R. Licklider, the first director of the Information Processing Techniques Office (IPTO) at The Pentagon's ARPA issued an office memorandum addressed to Members and Affiliates of the Intergalactic Computer Network. It rescheduled a meeting in Palo Alto regarding his vision of a computer network which he imagined as an electronic commons open to all the main and essential medium of informational interaction for governments, institutions, corporations, and individuals.[25][26][27][28] As head of IPTO from 1962 to 1964, “Licklider initiated three of the most important developments in information technology: the creation of computer science departments at several major universities, time-sharing, and networking.”[28] By the late 1960s, his promotion of the concept had inspired a primitive version of his vision called ARPANET, which expanded into a network of networks in the 1970s that became the Internet.[27]

Immigration reform

The Immigration and Nationality Act of 1965 and other factors such as the mass exodus by Vietnamese boat people resulted in significant immigration, particularly by Asians, Latinos, and Portuguese, to Silicon Valley where they contributed to both the high-tech and production workforce.[29] The Asian-American population in Santa Clara County rose from 43,000 in 1970 to 430,000 in 2000. During the same period the Latino population grew to 24% in the county and 30% in San Jose. The African-American population in the county remained steady but grew slightly to about 5%.[30] Expansion of the H-1B visa in 1990 also played a role.[31]

Homebrew Computer Club

The Homebrew Computer Club was an informal group of electronic enthusiasts and technically minded hobbyists who gathered to trade parts, circuits, and information pertaining to DIY construction of computing devices.[34] It was started by Gordon French and Fred Moore who met at the Community Computer Center in Menlo Park. They both were interested in maintaining a regular, open forum for people to get together to work on making computers more accessible to everyone.[35]

Media

In 1980, Intelligent Machines Journal -a hobbyist journal- changed its name to InfoWorld, and, with offices in Palo Alto, began covering the explosive emergence of the microcomputer industry in the valley.[38]

Software

Although semiconductors are still a major component of the area's economy, Silicon Valley has been most famous in recent years for innovations in software and Internet services. Silicon Valley has significantly influenced computer operating systems, software, and user interfaces.

While Xerox marketed equipment using its technologies, for the most part its technologies flourished elsewhere. The diaspora of Xerox inventions led directly to 3Com and Adobe Systems, and indirectly to Cisco, Apple Computer, and Microsoft. Apple's Macintosh GUI was largely a result of Steve Jobs' visit to PARC and the subsequent hiring of key personnel.[39] Cisco's impetus stemmed from the need to route a variety of protocols over Stanford's campus Ethernet.

The Internet

Commercial use of the Internet became practical and grew slowly throughout the early 1990s.

Internet bubble

Silicon Valley is generally considered to have been the center of the dot-com bubble, which started in the mid-1990s and collapsed after the NASDAQstock market began to decline dramatically in April 2000. During the bubble era, real estate prices reached unprecedented levels. For a brief time, Sand Hill Road was home to the most expensive commercial real estate in the world, and the booming economy resulted in severe traffic congestion.

Early 21st century

After the dot-com crash, Silicon Valley continues to maintain its status as one of the top research and development centers in the world. A 2006 The Wall Street Journal story found that 12 of the 20 most inventive towns in America were in California, and 10 of those were in Silicon Valley.[41] San Jose led the list with 3,867 utility patents filed in 2005, and number two was Sunnyvale, at 1,881 utility patents.[42] Silicon Valley is also home to a significant number of "Unicorn" ventures, referring to startup companies whose valuation has exceeded $1 billion dollars.[43]

Economy

Overview

Silicon Valley has a social and business ethos that supports innovation and entrepreneurship. Attempts to create "Silicon Valleys" in environments where disruptive innovation does not go over well have a poor track record.[44]

The San Francisco Bay Area has the largest concentration of high-tech companies in the United States, at 387,000 high-tech jobs, of which Silicon Valley accounts for 225,300 high-tech jobs. Silicon Valley has the highest concentration of high-tech workers of any metropolitan area, with 285.9 out of every 1,000 private-sector workers. Silicon Valley has the highest average high-tech salary in the United States at $144,800.[45] Largely a result of the high technology sector, the San Jose-Sunnyvale-Santa Clara, CA Metropolitan Statistical Area has the most millionaires and the most billionaires in the United States per capita.[46]

The region is the biggest high-tech manufacturing center in the United States.[47][48] The unemployment rate of the region was 9.4% in January 2009, up from 7.8% in the previous month.[49] Silicon Valley received 41% of all U.S. venture investment in 2011, and 46% in 2012.[50] More traditional industries also recognize the potential of high-tech development, and several car manufacturers have opened offices in Silicon Valley to capitalize on its entrepreneurial ecosystem.[51]

Manufacture of transistors is, or was, the core industry in Silicon Valley. The production workforce[52] was for the most part composed of Asian and Latina immigrants who were paid low wages and worked in hazardous conditions due to the chemicals used in the manufacture of integrated circuits. Technical, engineering, design, and administrative staffs were in large part [53] well compensated.[54]

Silicon Valley has a severe housing shortage, caused by the market imbalance between jobs created and housing units built: from 2010 to 2015, many more jobs have been created than housing units built. (400,000 jobs, 60,000 housing units)[55] This shortage has driven home prices extremely high, far out of the range of production workers.[56] As of 2016 a two-bedroom apartment rented for about $2,500 while the median home price was about $1 million.[55] The Financial Post called Silicon Valley the most expensive U.S. housing region.[57]Homelessness is a problem with housing beyond the reach of middle-income residents; there is little shelter space other than in San Jose which, as of 2015, was making an effort to develop shelters by renovating old hotels.[58]

Saratoga is the 16th most educated and the 8th wealthiest city in the United States.[64][65]

Depending on what geographic regions are included in the meaning of the term, the population of Silicon Valley is between 3.5 and 4 million. A 1999 study by AnnaLee Saxenian for the Public Policy Institute of California reported that a third of Silicon Valley scientists and engineers were immigrants and that nearly a quarter of Silicon Valley's high-technology firms since 1980 were run by Chinese (17 percent) or Indian CEOs (7 percent).[66] There is a stratum of well-compensated technical employees and managers, including 10s of thousands of "single-digit millionaires." This income and range of assets will support a middle-class lifestyle in Silicon Valley.[67]

Diversity

In November 2006, the University of California, Davis released a report analyzing business leadership by women within the state.[68] The report showed that although 103 of the 400 largest public companies headquartered in California were located in Santa Clara County (the most of all counties), only 8.8% of Silicon Valley companies had women CEOs.[69]:4,7 This was the lowest percentage in the state.[70] (San Francisco County had 19.2% and Marin County had 18.5%.)[69]

Silicon Valley tech leadership positions are occupied almost exclusively by men.[71] This is also represented in the number of new companies founded by women as well as the number of women-lead startups that receive venture capital funding. Wadhwa said he believes that a contributing factor is a lack of parental encouragement to study science and engineering.[72] He also cited a lack of women role models and noted that most famous tech leaders—like Bill Gates, Steve Jobs, and Mark Zuckerberg—are men.[71]

In 2014, tech companies Google, Yahoo!, Facebook, Apple, and others, released corporate transparency reports that offered detailed employee breakdowns. In May, Google said 17% of its tech employees worldwide were women, and, in the U.S., 1% of its tech workers were black and 2% were Hispanic.[73] June 2014 brought reports from Yahoo! and Facebook. Yahoo! said that 15% of its tech jobs were held by women, 2% of its tech employees were black and 4% Hispanic.[74]Facebook reported that 15% of its tech workforce was female, and 3% was Hispanic and 1% was black.[75] In August, Apple reported that 80% of its global tech staff was male and that, in the U.S., 54% of its tech jobs were staffed by Caucasians and 23% by Asians.[76] Soon after, USA Today published an article about Silicon Valley's lack of tech-industry diversity, pointing out that it is largely white or Asian, and male. "Blacks and Hispanics are largely absent," it reported, "and women are underrepresented in Silicon Valley—from giant companies to start-ups to venture capital firms."[77] Civil rights activist Jesse Jackson said of improving diversity in the tech industry, "This is the next step in the civil rights movement"[78] while T.J. Rodgers has argued against Jackson's assertions.

As of October 2014, some high-profile Silicon Valley firms were working actively to prepare and recruit women. Bloomberg reported that Apple, Facebook, Google, and Microsoft attended the 20th annual Grace Hopper Celebration of Women in Computing conference to actively recruit and potentially hire female engineers and technology experts.[79] The same month, the second annual Platform Summit was held to discuss increasing racial and gender diversity in tech.[80] As of April 2015 experienced women were engaged in creation of venture capital firms which leveraged women's perspectives in funding of startups.[81]

After UC Davis published its Study of California Women Business Leaders in November 2006,[69] some San Jose Mercury News readers dismissed the possibility that sexism contributed in making Silicon Valley's leadership gender gap the highest in the state. A January 2015 issue of Newsweek magazine featured an article detailing reports of sexism and misogyny in Silicon Valley.[82] The article's author, Nina Burleigh, asked, "Where were all these offended people when women like Heidi Roizen published accounts of having a venture capitalist stick her hand in his pants under a table while a deal was being discussed?"[83]

Silicon Valley firms' board of directors are composed of 15.7% women compared with 20.9% in the S&P 100.[84]

Schools

Funding for public schools in upscale Silicon Valley communities such as Woodside, California is often supplemented by grants from private foundations set up for that purpose and funded by local residents. Schools in less favorable demographics such as East Palo Alto, California must depend on state funding.[90]

Municipalities

The following Santa Clara County cities are traditionally considered to be in Silicon Valley (in alphabetical order):

The geographical boundaries of Silicon Valley have changed over the years, traditionally Silicon Valley is known as Santa Clara County, southern San Mateo County and southern Alameda county.[91] However, over the years this geographical area has been expanded to include San Francisco County, Contra Costa County, and the northern parts of Alameda County and San Mateo County, this shift has occurred due to the expansion in the local economy and the development of new technologies.[91][92]

In 2015, MIT researchers developed a novel method for measuring which towns are home to startups with higher growth potential and this defines Silicon Valley to center on the municipalities of Menlo Park, Mountain View, Palo Alto, and Sunnyvale.[94][95]

Higher education

Stanford University, 20 mi (30 km) outside of San Jose, is one of the top universities in the world.

Media

Local and national media cover Silicon Valley and its companies. CNN, The Wall Street Journal, and Bloomberg News operate Silicon Valley bureaus out of Palo Alto. Public broadcaster KQED (TV) and KQED-FM, as well as the Bay Area's local ABC station KGO-TV, operate bureaus in San Jose. KNTV, NBC's local Bay Area affiliate "NBC Bay Area", is located in San Jose. Produced from this location is the nationally distributed TV Show "Tech Now" as well as the CNBC Silicon Valley bureau. San Jose-based media serving Silicon Valley include the San Jose Mercury News daily and the Metro Silicon Valley weekly. Specialty media include El Observador and the San Jose / Silicon Valley Business Journal. Most of the Bay Area's other major TV stations, newspapers, and media operate in San Francisco or Oakland. Patch.com operates various web portals, providing local news, discussion and events for residents of Silicon Valley. Mountain View has a public nonprofit station, KMVT-15. KMVT-15's shows include Silicon Valley Education News (EdNews)-Edward Tico Producer.

↑ Leonhardt, David (April 6, 2008). "Holding On". The New York Times. Archived from the original on May 25, 2017. Retrieved December 7, 2014. In 1955, the physicist William Shockley set up a semiconductor laboratory in Mountain View, partly to be near his mother in Palo Alto. …

↑ Markoff, John (January 13, 2008). "Two Views of Innovation, Colliding in Washington". The New York Times. Archived from the original on January 1, 2016. Retrieved December 7, 2014. The co-inventor of the transistor and the founder of the valley's first chip company, William Shockley, moved to Palo Alto, Calif., because his mother lived there. ...

↑ Wozniak, Steve (2006). iWoz. W.W. Norton & Company. p.150. ISBN978-0-393-33043-4. After my first meeting, I started designing the computer that would later be known as the Apple I. It was that inspiring.

↑ W. Josephujjwal sarkar Campbell (January 2, 2015). "The Year of the Internet". 1995: The Year the Future Began(hardcover)|format= requires |url= (help). University of California Press. ISBN978-0-520-27399-3.

↑ James B. Stewart (June 18, 2015). "A Fearless Culture Fuels U.S. Tech Giants". The New York Times. Archived from the original on June 19, 2015. Retrieved June 19, 2015. Europeans are also much less receptive to the kind of truly disruptive innovation represented by a Google or a Facebook

↑ Claire Cain Miller (April 1, 2015). "Female-Run Venture Capital Funds Alter the Status Quo"(Dealbook blog). The New York Times. Archived from the original on April 1, 2015. Retrieved April 2, 2015. “We’re in the middle of a shifting trend where there are newly wealthy women putting their money to work, and similarly we’re starting to have a larger number of experienced investors,”

↑ Farhad Manjoo (March 27, 2015). "Ellen Pao Disrupts How Silicon Valley Does Business". The New York Times. Archived from the original on March 28, 2015. Retrieved March 28, 2015. Ms. Klein argued that the Kleiner trial would become a landmark case for women in the workplace, as consequential for corporate gender relations as Anita Hill’s accusations in 1991 of sexual harassment during the confirmation hearings of Supreme Court Justice Clarence Thomas

1 2 O'Brien, Chris (2012-04-19). "Welcome to the new and expanded Silicon Valley". The Mercury News. Retrieved 2018-04-10. After years of drawing a sharp circle that included Santa Clara County as well as southern San Mateo and Alameda counties, this newspaper is expanding the geographic boundaries that it considers to be part of Silicon Valley to include the five core Bay Area counties: Santa Clara, San Mateo, San Francisco, Alameda and Contra Costa.

↑ Malone, Michael S. (2013-06-05). "Silicon Valley's Newest Address? Look East". Forbes. Retrieved 2018-04-10. which contains Contra Costa County, has already had its Silicon Valley growth boom, fueled in large part by the dot.com bubble of the Nineties.